In a research report published this morning, Canaccord analyst Michael Walkley reiterated a Hold rating on BlackBerry Ltd (NASDAQ:BBRY), while reducing the price target to $8.00 (from $10.00), which reflects a potential downside of 9% from Wednesday closing price. The decreased price target comes as one-time payments from licensing deals mask weak Q1/F16 results. In reaction, shares of BlackBerry closed yesterday at $8.81, down $0.39 or 4.24%
Walkley wrote, “BlackBerry reported weak Q1/F16 results with sales and pro forma EPS below our below-consensus estimates. While reclassified software and technology licensing revenue was well above our and consensus software only estimates, the strong sales were driven by significant one-time payments from the two technology licensing deals signed during the quarter. In fact, management lowered its overall F’16 software-related sales expectations from $600M to ~$500M due to lower BBM expectations. Also, the $500M includes licensing revenue versus prior expectations not implying licensing revenue.”
Furthermore, “Based on management’s FY16 growth expectations for the core EMM business, we believe BlackBerry faces the challenging task of selling not just EMM subscriptions but must also upsell increasing amounts of VAS and close additional technology licensing deals to meet its lowered FY16 targets. Further, we believe the continued steep decline in high margin services business and ongoing tepid hardware sales will remain a headwind to meaningful profitability during FY16/FY17.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst T. Michael Walkley has a total average return of 24.6% and a 71.5% success rate. Walkley has a 23.9% average return when recommending BBRY, and is ranked #5 out of 3640 analysts.
Out of the 28 analysts polled by TipRanks, 3 rate BlackBerry stock a Buy, 18 rate the stock a Hold and 7 recommend to Sell. With a return potential of 9%, the stock’s consensus target price stands at $9.60.